Choice of law
The general rule that applies in Macedonia is that the parties are free to choose the governing law to their contract unless it is regulated differently under applicable law or an international agreement. If the parties have not selected a governing law, the closest connection doctrine would apply, i.e. the law of the state with which the contract is in closest relationship shall be applied. Exceptionally, for contracts related to real estate, the law of the state in whose territory the real estate is located is exclusively applicable. Also, there are certain limitations to the party autonomy in case of a consumer agreements.
A connection between the chosen law and the contractual relationship is not required. Therefore, parties can choose a “neutral” law that would not privilege either side. Additionally, the parties can agree on the applicable law at the moment of the conclusion of the contract, or after that moment, for the whole or for part of the agreement.
The law provides that the choice of law can be explicitly or implicitly expressed, i.e. it can derive from the provisions of the contract or other circumstances.
Choice of dispute resolution forum
The parties’ autonomy is also a criteria for determining the dispute resolution forum. The parties can explicitly or implicitly agree that the dispute between them shall be resolved by a competent court (choice of court agreement) or an arbitration tribunal (arbitration agreement). The parties can enter into this type of agreements before the dispute arises in the form of a contractual provision, or after the dispute emerges.
Choice of court agreement
The parties may agree on the jurisdiction of a foreign court only if at least one of them is a foreign citizen or legal person established abroad, and a local court does not have exclusive jurisdiction in that matter. Courts of North Macedonia have exclusive jurisdiction over number of disputes, including bankruptcy proceeding, disputes over changes in status of companies, disputes over real estate located in North Macedonia, or intellectual property registered in North Macedonia etc. Also, parties cannot agree on the jurisdiction of a foreign court in disputes related to consumer relations and disputes on insurance relations if the consumer, i.e., the insured person who is a natural person is domiciled in North Macedonia.
The parties may also agree on the jurisdiction of a local court if at least one of the parties is a citizen of North Macedonia or a legal entity with a registered seat in North Macedonia. Also, it will be considered that the defendant agreed to the jurisdiction of the local court if he engaged in discussing the subject matter of the proceedings and did not challenge the jurisdiction.
The law provides for certain exceptions to the parties’ autonomy in this area by stipulating that specific disputes, such as (i) marriage disputes; (ii) disputes for establishing or challenging paternity or maternity; (iii) disputes for custody and raising of children under parental care; (iv) child support disputes; and (v) parental right disputes, cannot be subject to a choice of court agreement.
According to the applicable law in North Macedonia, the parties to an agreement can agree on the jurisdiction of a foreign arbitration only in cases when (i) one of the parties has a residence or a registered seat outside of North Macedonia, or (ii) the place where substantial part of the obligations under the commercial relationship should be fulfilled, or the place where the subject matter is most closely connected to, is not in North Macedonia. This would not be applicable in cases where the law stipulates that a court in North Macedonia has exclusive jurisdiction on a specific matter. The agreement should be concluded in writing and should refer to a defined legal relationship, whether contractual or not.
The local arbitration law is a verbatim adoption on the 1985 UNCITRAL Model Law and the main arbitration institution in North Macedonia is the Permanent Court of Arbitration within the Economic Chamber of the Republic of North Macedonia. It has authority to administer both domestic and international disputes. North Macedonia is party to the 1965 Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States and the 1961 European Convention on International Commercial Arbitration.
All foreign court and arbitral decisions are subject to a recognition procedure by competent local courts in North Macedonia after which they become equal to the decisions adopted by the local courts. There are several conditions for recognition of a foreign court decision including the following: (i) a Certificate of validity and enforceability should be submitted to the court; (ii) the right of the parties to provide their defence in the dispute should have been respected; (iii) the court which adopted the decision should be competent; (iv) there should not be a previous valid decision between the same parties about the same subject matter; and (v) the public order should not be infringed by the recognition and/or enforcement of the foreign court decision/arbitral award.
Any arbitral award enacted outside of North Macedonia is considered a foreign arbitral award thus its recognition and enforcement is conducted under the conditions set in the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The procedure is conducted before the Basic Courts in North Macedonia.
After its recognition, the decision is considered equal to a decision adopted by the competent local authorities and the enforcement procedure is the same for both. It begins when the creditor requests enforcement of the decision by a competent enforcement agent. Enforcement of a monetary claim can be performed only by selling movable objects, selling real estate, selling securities and shares in trade companies, transferring a monetary claim, converting money into other property rights, and transferring funds that are kept on the account with a payment operations carrier. The subject of enforcement for the purpose of settling a monetary claim may be any debtors’ asset, property right and real estate registered in the real estate cadastre, which is not exempted from enforcement by law, or if the enforcement against them is not restricted by law. The means of enforcement of non-monetary claims are adjusted to the nature of the non-monetary claims.